As is the case with most research, the design of this study is also subject to certain limitations. They arise mostly from the lack of previous research in the topic and inevitable shortcomings of the empirical research process. As was described by Centeno et al. (2013), Krake (2005) and Merrilees (2007) the corporate branding research has traditionally focused on large, established, companies instead of SMEs and new ventures. This meant that the branding literature on established
SMEs was already scarce, but about newly created startups even more so. Alt-hough for the most part the literature on SME branding is applicable to startups as well, it must be acknowledged that there might be some areas where the theory is not directly transferrable. The quality of the empirical data was somewhat in-fluenced by how differently the interviewees understood the branding terminol-ogy. This confusion could have been avoided by shortly defining the key con-cepts in the beginning of the interviews, but since the intent was to find genuine opinions and perspectives on the topic, the definitions were knowingly left out.
It is likely that the superficial understanding of the brand concept affected espe-cially the questions regarding brand’s influence on angel investor decision-mak-ing because many of the responses given by the interviewees referred mainly to the visual aspects of a corporate brand.
The subconscious nature of brand’s influence on opportunity evaluation makes it a challenging subject to study even with the most adequate method of thematic interviewing. The issue was also noted by Maxwell et al. (2011) who studied the investment decisions of business angels and observed that the factors the angels initially considered critical for evaluating the startup were not neces-sarily used in their final investment decision. This challenge is perfectly de-scribed in the following quote from the advertising legend David Ogilvy:
"The problem with market research is that people don't think how they feel, they don't say what they think, and they don't do what they say." — David Ogilvy
Regardless of the challenging topic, the research could have benefitted from ad-ditional interviews with angel investors and using a specific set of deeply prob-ing questions. Nevertheless, the author attempted to offset this limitation by per-forming a more thorough theoretical review of the available literature.
The novel subject of this study evoked many questions and opened new interest-ing avenues for further research, of which the most prominent are presented be-low. As was described in the literature review, the investment decisions made in the high uncertainty context of angel investing are characterized by the use of intuition and mental heuristics. An area worth the further research would be the different heuristics and cognitive biases that are influencing the angel investor decision-making. In practice this could mean viewing angel investor behaviour through the lens of the ground-breaking research on judgement and decision-making by Daniel Kahneman and Amos Tversky. Increased knowledge of these factors would result in better investment decisions as the investors would be-come more aware of the subconscious mechanisms guiding their decision-mak-ing process.
Sullivan and Miller (1996) divided angel investors into three groups, eco-nomic, hedonistic and altruistic, based on the perceived value and benefits they seek from the investment activity and suggested the entrepreneurs to adopt a marketing approach in engaging the investors. The academic consensus, high-lighted in this research, is that angels are motivated mainly by other things than financial returns. This raises the question of how could the startup provide the
investors a more fulfilling and meaningful experience by developing the interac-tion with the same rigor they develop their customer experience. As branding is the main tool of providing the customer experience with purpose and meaning, it is likely that it has a central role in forming the investor experience as well.
AI1 brought up the question of how startups can have valuations of sev-eral millions when the team consists of only three men and a laptop? And more importantly how could this gap be made bigger? In the light of the findings it is highly likely that the valuation is influenced by the invisible balance-sheet, which in turn is influenced by the corporate brand of the startup. Literally the million-dollar question of “how the corporate brand of a startup influences its valua-tion?” deserves more attention and most certainly calls for further research.
Some of the interviewees believed that brands play a more important role in consumer markets than in angel investment. However, the author would ar-gue that the difference would rather be found between high-involvement and low-involvement decisions, which are equally present in the investment setting as they are in consumer markets. For example, the thousands of investors who invest in a crowdfunding campaign a sum of few hundred euros probably expe-rience a lower involvement in their decision-making, and therefore are more in-fluenced by the brand than the few angels who invest tens of thousands in other funding rounds. It would be interesting to study whether the influence of brand on investment decisions depends on the level of involvement the decision-maker experiences and whether there is a difference between the different stages of in-vestment (pre-seed, early stage, series A, IPO).
Yet another interesting avenue for further research would be to map out what kind of pre-existing mental prototypes of “successful startup founders” an-gel investors have. Elsbach and Kramer (2003) suggested that when experts as-sess the creativity of unknown pitchers, they compare behavioural and physical cues to their mental prototypes of a creative person. This same phenomenon is described as the representativeness heuristic by Tversky & Kahneman (1974).
Along the same lines, Zott and Huy (2007) suggested the founders can improve their personal credibility by displaying personal attributes linked to existing en-trepreneurial prototypes. MP6 explained that similar dynamics are at play when angels evaluate startup founders and that some people “simply look like entre-preneurs”. Understanding the qualities of such entrepreneurial prototype would greatly benefit startup founders seeking to make a positive impression on inves-tors and the press.
8 CONCLUSIONS
This research was motivated by two rather unpopular beliefs. Firstly, that small startups are equally capable of brand building as are the large corporations. And secondly, that angel investment decisions are mostly based on intuitive gut feel-ings that are directly influenced by the startup’s corporate brand. These ideas were explored further by defining the best practices of startup branding, and by building a theoretical bridge between venture funding research and the domain of SME branding studies. The data required to illuminate the subject was gath-ered both by reviewing the existing academic literature and through a qualitative case study in which thematic interviews were conducted with marketing profes-sionals, startup founders and angel investors.
The first part of the literature review examined the content and processes of brand building in startups. The second part covered the venture funding con-text in general and the angel investor decision-making process in particular. The fourth chapter gathered the previously discussed topics under a unified theoret-ical framework, illustrating the process of corporate branding and how the brand influences angel investors’ decision-making. The fifth chapter outlines the ap-plied research methodology and in chapter six the empirical results are presented before discussing them in the context of theoretical findings in chapter seven.
Considering the important role that startups play in the national economy and employment creation, the results of this study have the potential for creating a positive societal impact by reducing the high mortality rate of new ventures.
Altogether the research provided solid support for the counter-intuitive beliefs described earlier, while also yielding a number of valuable implications for both theory and practice. The study contributed to covering the research gap in SME branding and addressed the call for creating practical brand building guidelines previously lacking from the literature. This research benefits the startups by clar-ifying the basic concepts of corporate branding and offering actionable advice for brand building in practice. The most significant theoretical implication of this study is the development of the framework that demonstrates the corporate brand’s subconscious influence on angel investor’s intuitive decision-making.
The part of results that seemingly contradicted this finding by stating that angel investors are not interested in brand related aspects when evaluating startups, only highlighted the significance of the found connection. This conflict demon-strates that the commonly held view of angel investing as a rational and analyti-cal activity needs to be updated with further research into the subconscious fac-tors affecting the investment decisions.
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APPENDICES
APPENDIX 1: Interview Framework
Background questions:
• What is your name, title and responsibilities?
• What is your name, title and responsibilities?